A slightly different option and one that we did is to do NYE dinner at Quay.

A wonderful restaurant in the customs house on Circular Quay, it is located at the foot of the Harbour Bridge right next to the Park Hyatt, across from the Opera House.

Views to absolutely die for. The most important part is that they have a series of terraces and what can only can be described as an open air watch tower where restaurant guests can go to watch the fireworks from outside. We found this great for a number of reasons: (i) amazing meal, (ii) excellent location for watching the fireworks - only place better would be from a boat in the harbour, and (iii) you are actually in the midst of the crowds and can feel their energy, yet you are about three floors above them so you are not actually amongst them.

In terms of rooms to watch from I would probably second Quay Suites (that's the toaster right?). The benefit I see here is they have balconies and I think you need to be outside to hear, feel and smell fireworks to get the entire experience. Plus another way of feeling the energy of the crowds without actually being amongst them.

Did once watch the Australia Day celebrations from the Four Seasons (then the Regent) from a corner Jr. Suite with harbour view. Was pretty phenom, especially when the jet fighters flew right past my window below the tops of some of the buildings!